concentrated strategy

A concentrated strategy (also called a focus strategy) is when a company targets a narrow, specific market segment and puts all its effort into serving that segment extremely well instead of trying to serve everyone.

🔑 Simple idea

Instead of saying:

“We will sell to everyone,”

the company says:

“We will serve this specific group better than anyone else.”

🎯 Key characteristics

  1. Narrow target market

    • Could be based on:

      • Age group (e.g., only teenagers)

      • Income level (luxury buyers)

      • Location (only urban areas)

      • Specific need (e.g., athletes)

  2. Deep understanding of customers

    • The firm knows its customers very well

    • Products/services are tailored to their exact needs

  3. Specialization

    • Focus on one product line or niche

    • Not diversified like large companies

  4. Competitive advantage

    • Either:

      • Lower cost in that niche, or

      • Differentiation (unique quality, design, service)

🧠 Easy example (real-life thinking)

Imagine two businesses:

🏪 Big supermarket

  • Sells everything to everyone

  • Competes broadly

👟 Small sports shop (concentrated strategy)

  • Only sells running shoes for athletes

  • Knows:

    • Best brands

    • Customer foot types

    • Performance needs

👉 That shop can beat the supermarket in that niche, even if it is smaller.

📊 Types of concentrated strategy

  1. Cost focus

    • Be the cheapest in a specific niche

  2. Differentiation focus

    • Be unique/premium in a niche

⚖ Advantages

  • Strong customer loyalty

  • Less competition (in the niche)

  • Expertise and reputation

  • Efficient use of resources

⚠ Disadvantages (be realistic)

  • High risk → if the niche disappears, the business suffers

  • Limited growth opportunities

  • Vulnerable if big firms enter the niche

🧩 Real-world story (to understand deeply)

Think about a small café that only serves:

high-quality Ethiopian coffee for coffee lovers

It doesn’t try to compete with big chains selling everything.
Instead:

  • It perfects coffee quality

  • Builds a loyal niche audience

Even if a big company comes, that café can survive because:

it understands its customers better than anyone.

🧠 In one sentence

A concentrated strategy is:

focusing all business efforts on a specific market niche and serving it better than competitors.

If you want, I can —that’s where most students get confused.